Buying gold can be a really interesting investment. There are several ways to invest in gold. It is a safe bet that attracts more and more people. But before embarking on the purchase of gold, a few rules should be known.
Summary
1- Two distinct domains
The purchase of gold is based on two areas: physical gold and virtual gold. This difference is to be taken into account when you want to buy gold. The choice of physical gold or virtual gold will depend on the needs and dispositions of the acquirer. For physical gold, there are again two categories: coins and bars. Among the gold coins, the non-exchangeable ones have a value that changes according to the official gold price. Exchangeable coins, on the other hand, have a value that also depends on their quality and quantity of pure gold. Finally, collectibles have a value that is defined by their rarity and demand. Collector’s items are intended to be resold as soon as purchased. Ingots are preferred for those who want to buy gold and who have a substantial budget. They are not subject to this notion of rarity and seniority. Their quotation is determined on the international markets. Gold physical gold purchase, a certificate must be issued. It must mention precise information such as the quantity of gold, the hallmark and the stamp of the foundry. Virtual gold is often stored in bank vaults that allow gold to be purchased. Last type of gold, paper gold, represents dematerialized gold. Very often, it is reserved for professional investors.
2- The value evolves
The value of gold fluctuates every day. Thus, it can benefit from a considerable increase and then be impacted by an equally significant drop. The price of gold is therefore not fixed. It follows the same principle as all other values such as silver or platinum. The value of the gram of gold contained in the coins or bars is very important. Because the weight in gold varies according to the pieces.
Gold is quoted every business day in the most important regions of the world such as Singapore, Shanghai, Zurich, New York or London. However, it is in the English capital that the main quotation market is played since it is there that the price of gold is fixed according to supply and demand. For the resale, it is necessary to take into account the price of the gram of gold and to resell at the most opportune moment. To buy, it is better to wait until the price is at its lowest.
3- A reliable investment
For many investors, buying gold is a profitable investment over the long term. It suffers virtually no devaluation. Even its price fluctuates, gold will always be worth something. The best form of gold to invest in is physical gold. For a large investment, the ingot of one kilo is recommended. For a more moderate investment, it is better to turn to coins. The purchase of gold should be done according to the budget and it is better to invest around 7% of your portfolio. Because, even if gold is a safe investment, it does not allow you to benefit from regular income like stock market investments.
4- The tax rule
Regarding taxation, the purchase of gold is not subject to any taxation. There is no VAT to pay when buying gold except for coins minted before 1800. However, this is different when selling. Certain tax rules apply. Taxation on the sale of gold follows a rather special regime. If the future seller is able to prove the date of acquisition of the coins and/or ingots, the capital gains will be taxed at 36.2%, social security contributions included. A 5% reduction will be applied per year of detention from the third year and an exemption beyond twenty-two years. If it is impossible to prove the date of acquisition or the cost price, the tax is 11% of the total amount of the transaction.
5- A few precautions to take
Like any big purchase, any investor should be careful before buying gold (learn more here). You have to be careful about the quality of the products offered. A gold test is recommended before any purchase of physical gold. Banking establishments generally offer very good quality products but at prices that are too high, do not hesitate to bring the competition into play to lower the prices a little. On specialized sites, caution is also required. Some coins and bars are fakes. Again, a gold test is strongly advised.
In case of purchase of physical gold it is not recommended to keep the gold at home. Similarly, after acquiring gold, it is recommended to insure it against damage and theft. The insurer can even require the purchaser to keep his gold in a safe.
Read also: Gold price: will gold reserves run out soon?
